Understanding Unlimited Approval in Ethereum: ERC-20 Allowance Risks
Dabao Wong reveals the systemic security risks of 'unlimited token approvals' in ERC-20 smart contracts, showing how vulnerable DApps lead to total wallet drains.
Summary
The Ubiquity of the ERC-20 Token Standard
Decentralized applications (DApps) and DEXs rely on the ERC-20 approve() function to allow smart contracts to transfer tokens on a user's behalf.
The Anti-Pattern of Unlimited Approvals
Dabao Wong explains why DApps routinely request users to grant infinite token allowances ($2^{256}-1$) to avoid repetitive gas fees for each transaction.
Exploiting Lingering Allowances in Compromised DApps
Wong demonstrates how an attacker who discovers a vulnerability in a legacy DApp contract can drain tokens directly from users who approved the contract years earlier.
Safer Token Approval Paradigms
The author reviews mitigation frameworks, including ERC-2612 permit signatures, allowance revocation tools, and browser wallet permission warnings.
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